Uganda Govt seeks $200M to subsidise electricity connections

The government expect to double electricity production to 2000 in the next two years

Kampala, Uganda | THE INDEPENDENT | Uganda government is in the last stages of approving a free electricity connection fee policy for some parts of the country to increase domestic consumption, according to Irene Muloni, the Minister for Energy and Mineral Development.

Muloni, who was speaking during a signing ceremony that took place at Ministry of Finance headquarters on April 26 in which the Japanese government committed US$201 million for infrastructure projects countrywide, said the government is currently negotiating with undisclosed financier a US$200million loan to implement free electricity connection to the population.

“Despite all our efforts, electrification in Uganda is only at 22% which is very low. This is worrying for the Ministry and the government,” she said.

“If we are to realise industrialisation and add value to our goods, more areas and more Ugandans must be able to access electricity that is reliable and affordable.”

Moloni said the leading factor hampering electrification especially in upcountry districts, is that people cannot afford the connection fees.

Currently electricity connection fee range between Shs98, 000 and Shs2million depending on the distance to the premises and nearby electricity pole.

In addition, an inspection fee of about Shs41, 000 has to be paid first to the electricity distribution company.

At the moment, there are 10 distribution companies in Uganda although the two main ones by clientele size are Umeme Uganda and Ferdsult Engineering Services.

Muloni said Uganda is currently producing excess supply that is not being fully used and this partly explains the relatively high tariffs.

“Uganda is currently producing 950MW. We expect this to be doubled to 2000 in two years. So production is currently not an issue in Uganda. However this has not solved the issue of limited domestic use of electricity,” she said.

She said currently the government has connected all district headquarters to the national grid apart from four which will also be connected in the near future. This program is to be extended to all sub-country headquarters and later to villages.

“For all areas that we will extend electricity to, they will be free connection to homesteads. The owner will only be charged money for wiring. We are also putting in place technology that will ensure that the wiring is done at an affordable price,” Muloni said.

This new development comes barely two months since Umeme said it was ready to work with the Ugandan government to increase electricity connections in the country as a measure to drive the cost of electricity downwards.

This was in response to President Yoweri Museveni letter to Muloni dated March 21 expressing his dissatisfaction about the company’s performance in relation to tariffs.

The President said the company is cheating power users, starting with fraud of inflating the magnitude of technical and commercial losses – which he blamed on some officials in the Ministry of Energy.

“I am now directing you to furnish me with the explanation on all these matters,” Museveni wrote. In the same letter, he stressed that there should be no question of renewing Umeme’s concession.

This prompted the company officials including its chairperson Patrick Bitature and the Chief Executive Officer, Selectino Babungi, to hold a special meeting with the President to iron out issues regarding tariffs and its entire operation.